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Legal Alert: Burgess v Lejonvarn [2016] EWHC 40 (TCC)

How many professionals have at one time or another offered advice to friends and family gratuitously in response to a problem that friend or family member is experiencing? The decision of the Technology and Construction Court (TCC) in Burgess v Lejonvarn [2016] EWHC 40 (TCC) comes as a stark warning to all professionals of the risks inherent in so doing.

The Burgesses and the Lejonvarns had been good friends for over 10 years. At the Burgesses’ Olympic themed party, Mr Burgess revealed to Mrs Lejonvarn the plan that he had for landscaping his garden. The plan had an initial quote of £175,622 plus VAT attached to it, later reduced to £150,000 plus VAT (presumably it was a very substantial garden!). Mrs Lejonvarn, a Netherlands registered architect, took the view that this price was excessive and the project could be completed at a lower cost.

Further conversations ensued and eventually Mrs Lejonvarn arranged for a contractor to carry out the work under her supervision and project management. There was no talk of her receiving payment for the work that she was doing, at least in the early stages of the project. The only financial remuneration she was expecting was in respect of design work envisaged at a later stage. Sadly the project did not go to plan. The workmanship was of questionable quality and the budget went out of the window, with the initial quote appearing to be the better option. Following the ensuing breakdown of their friendship, the Burgesses appointed the initial landscape gardener to complete the project and claimed the increased cost, including the remedial works, from Mrs Lejonvarn. Regrettably, for Mrs Lejonvarn, she did not have Professional Indemnity Insurance in place. At the trial (of preliminary issues) the Court decided that:

There was no contractual relationship between the Burgesses and Mrs Lejonvarn – basic elements, i.e. consideration, were missing; but

Mrs Lejonvarn nevertheless owed the Burgesses a duty of care in tort for several of the design and project management services provided. A professional can owe a duty of care for pure economic loss arising from a construction project, in respect of both advice and services provided.

The Court was quick to point out that this was “not a piece of brief adhoc advice of the type occasionally offered by professional people” in an informal context. It was a large project over a period of time, which was approached in a professional way, as opposed to an informal discussion between friends. Both parties provided significant investment. But knowing quite where the line exists between “off-the-cuff” informal assistance and professional advice giving rise to a duty of care must always be uncertain. Professionals should consider the following:

Never offer professional advice, or anything which could arguably constitute professional advice, without the protection of Professional Indemnity insurance. Whilst we all like to think that nothing will go wrong, there is a reason why P.I. cover is available.

Be careful about mixing business with friendships – a 10 year friendship was destroyed over the course of one project.

Always think about a contract or at the very least a retainer setting out the scope of your services. As the Court stated in the judgement – “in the absence of a contract it is important to exercise greater care in distinguishing between social and professional relationships”.

Compare jurisdictions: Arbitration

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